Amazon's president and COO resigned abruptly Tuesday. Personal reasons were cited. But high-profile resignations from companies as controversial as Amazon naturally lead to speculation and the parsing of each word, especially when those words speak of exhilaration at the opportunity to work for an another company with so much potential -- in this case, B2B website operator VerticalNet.
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In a three-sentence statement, Amazon offered the always intriguing "personal reasons" to explain the resignation. Sending wishes for "the very best," company founder and CEO Jeff Bezos said he believed Galli was making "the right decision for him and his family circumstances." Bezos will remain CEO and will replace Galli as president, a position he held before Galli replaced him. Before coming to Amazon in June 1999, Galli had been with Black and Decker (NYSE: BDK) for 19 years, most recently as president of its worldwide power tools and accessories division.
During a period when Amazon was aggressively expanding its product lines and building several inventory and distribution centers, Galli's bricks-and-mortar experience at Black and Decker perhaps served his new employer well. It didn't serve long, however. Nor did his experience at Amazon sufficiently inspire Galli to remain on the job. Also uninspiring are the Amazon stock options Galli leaves behind, all currently worthless with the stock trading about 35% lower than when he first arrived, and some 70% off all-time highs reached earlier this year.
The Galli Year
In a conference call hosted by Vertical Net on Tuesday, Galli said he decided to leave Amazon because he wanted "to move back East, which is home." With VerticalNet based in Horsham, PA, the switch "works out perfectly." And that counts as "personal" in most books. But high-profile resignations from companies as controversial as Amazon (which can probably be counted on one finger) naturally lead to speculation and the parsing of each word.
In addition to his family and the East Coast weather, Galli also finds "very exhilarating" the opportunity to work for VerticalNet, which has "so much potential" and is "not a company that needs turning around" -- a choice of words that no doubt warmed Jeff Bezos's heart back in Seattle this morning. Current VerticalNet president and CEO Mark Walsh (who will become company chairman) says his company was not searching for a new top guy, but that "when you see a great athlete on the draftboard, you grab him."
Then there is this interesting angle on Galli's resignation, offered by mystifiedbythis on the Fool's Amazon discussion board:
"A lesson could be learned here regarding integrity. Galli had signed an employment contract with Pepsico, and they had already announced his arrival to his direct reports when he left them at the altar. If someone's capable of leaving a company after a deal has been struck, they'd think nothing of doing it again regardless of the commitment made to their troops and employer. I know the days of loyalty and honor are dead, but I always thought that move made Galli a bit suspect."
Both Amazon and VerticalNet are set to deliver second-quarter results after the market closes today, with analyst estimates calling for per-share losses of $0.35, and $0.29, respectively. Even more than usual, though, attention will be focused on the conference calls, after the numbers are released, for indications of what Joseph Galli's cross-country vertical leap might mean for the companies and their shareholders.
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And so the Amazon chapter known as the "The Galli Year" comes to a close. Is there a disconnect between the "personal reasons" cited for Galli's abrupt resignation and his moving to another firm without missing a beat?
What does Joseph Galli's new job mean for his former and new employers? How much should be read into it? Are the circumstances surrounding his move more a reflection on the companies, or on Galli himself? All this, and other Foolishness, on the discussion boards for Amazon.com and VerticalNet.
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